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Construction World Magazine India | New home launches pan-India drops 83 per cent in Q3
New home launches pan-India drops 83 per cent in Q3
Developers offering offers to woo buyers this festive season
Real estate may be included under GST
Unsold Stock declined slightly due to lack of new launches
Unsold inventory dips by 2 per cent
Market to improve in Q4
In a report released by PropEquity, it said that the new home launches dipped 83 per cent across top eight cities in the third quarter of 2017 from 24,900 units to 4,313 units.
Lack of new launches was majorly attributed due to developers focussing on compliances with RERA and implementation of GST.
Also, as a measure of the slowdown in the real estate prices bottoming out, capital values including resale saw negligible correction if any.
Weighted average prices in the pre festive quarter remained at similar levels to Rs 6,433 per sq ft from Rs 6,490 per sq ft.
“This year the festive season has begun early and now we are witnessing the green shoots of recovery in the real estate sector specifically mid and affordable housing. Last November, the demonetisation severely impacted the real estate sector across India and that led to low transactions. There is definitely stable demand for ready-to-move-in and resale properties,” says
Samir Jasuja, Founder and CEO, PropEquity.
The unsold inventory dipped by 4 per cent to 4,46,730 units from 4,65,116 units due to lower new launches and developers focussing on clearing their existing unsold inventories which is at the finishing stage.
“We expect this festive season to do better than last year as developers are now offering lot of freebies and discounts to clear their earlier stock as well as selectively launching new projects. There is lot of unsold inventory in the market which is nearing completion,” Jasuja adds.
Housing demand (absorption) across key cities dropped by 35 per cent to 22,699 units from 34,809 units due to fewer new projects in the market and the lag effect in the revival of the end user driven demand, which is expected to pick up from the Q4, which is seasonally the best time to launch new projects.
Eight cities were included for the study including Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru and Chennai.
During Q3 2017, no new projects were launched as developers in this region were cautious due to RERA and GST compliance and were looking to clear existing inventories.
New Supply is expected to stay low for at least 6 months as RERA and GST will lead to implementation and compliance challenges.
Absorption witnessed a considerable change on QoQ or YoY basis and was reduced by 50 per cent and 13 per cent indicating less demand in the city. However, affordable segment witnessed the highest percentage in terms of absorption with a share of 73 per cent owing to Pradhan Mantri Awas Yogna (PMAY).
Prices were at Rs 6,198 per sq ft as available units comprised primarily of mid and premium segments.
Going ahead, New launches are expected to remain low and may accelerate by Q1 2018.
In Noida, only one project was launched in Q3 2017 which was catered to the Affordable segment.
Noida being oversupplied with substantial stock nearing completion was already struggling with the demonetization phase and now under the ambit of RERA and GST, it is unlikely to see new launches in the luxury segment, though Affordable segment can gain momentum due to PMAY.
The weighted average launch price for Q3 2017 was Rs 3,800 per sq ft, decreasing by 37 per cent on a YoY basis and by 9 per cent on a QoQ comparison.
Going ahead, Micromarkets like Sec-143B and Sec-90 may account for some demand in Q4 2017 due to upcoming office space.
In this region, absorptions was severly hit as it declined by 55 per cent (QoQ). These numbers of lesser new launches and absorptions point out that both supply and demand have been hit for the city. Weighted Average launch Price stood at Rs 20,962 per sq ft, declining by 11 per cent (QoQ).
For the next quarter, it is expected that the market will see an increased supply and demand. With RERA already implemented, demand for units in newly launched projects might also increase.
Demand was considerably high in Ghatkopar (E), Malad, and Chembur, with these regions having the highest absorption numbers.
Q3 2017 witnessed a considerable increase in new launch activity as compared with the previous quarter. On YoY basis Q3 2017 witnessed a sharp decline in new launch activity.
Absorption declined by 35 per cent on QoQ basis and 60 per cent on an YoY basis indicating that demand has fallen significantly in the city. It is expected that absorption numbers will remain low in the coming quarters due to the uncertainty surrounding RERA.
In Q3 2017, a sizeable portion (63 per cent) of total launches was seen in the affordable segment. The mid segment portion was 37 per cent of the total launches, while no new launches were seen in the Luxury segment.
Top four developers contributed to 99 per cent of the total supply of units in Q3 2017.
Demand was considerably high in Tangra micro market. The micro market witnessed launch of 537 units, out of which 108 were absorbed. This takes the ratio close to 20 per cent, which is the highest among the top micromarkets.
Demand is substantially high in North West region of Hyderabad where the commercial real estate is growing rapidly which in turn is generating housing needs.
The weighted average launch price for Q3 2017 was approximately Rs 3,899 per sq ft, increasing by 2 per cent on a YoY basis and decreasing by 1 per cent on a QoQ comparison.
In Hyderabad, the mid segment has the majority share in the committed delivery followed by luxury and affordable segment.
Nearly 4.13 million sq ft of commercial spaces is set to be completed in Q4 in the North west region mostly in HiTech City which will push housing demand.
Q3 2017 witnessed a considerable decrease in the new launch activity and absorption also crashed by 22 per cent and 50 per cent on QoQ and YoY basis.
Weighted Average Price stood at Rs 4,680 per sq ft, which indicates that the majority of the unsold units are in the mid segment.
Being an end-user driven market, the developers are now focusing on RERA compliance and pacing up construction of their under construction projects rather than launching new projects.
Bengaluru continues to dominate the office and commercial market and will witness completion of about 7 million sq ft of commercial space by end of 2017. Areas such as Outer Ring Road, Electronic City and Bellandur are likely generate sales in coming months.
New launches in Pune in Q3 were plundered as they crashed by 92 per cent and 97 per cent as compared to the previous quarter on QoQ basis and Q3 2016 on YoY basis respectively. In Q3 2017, the city has witnessed the lowest supply since 2007.
Absorption also witnessed a considerable decrease of 36 per cent and 53 per cent QoQ basis and YoY basis respectively.
Approximately 1.1 million sq ft of commercial area is scheduled for delivery in the upcoming quarter of 2017 and another 8.3 million sq ft in 2018, which would create more employment which in turn is most likely to increase the demand for housing sector around these commercial developments.
No new launch activity took place in Chennai during Q3 2017. The developers were concentrating on registering their ongoing projects with RERA which had briefly halted developers from launching new projects.
About 3.3 million sq ft of IT SEZ space and 0.4 million sq ft of mall space is scheduled for delivery in 2017 end in OMR and GST region which will generate jobs and help in housing demand.
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